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De Blasio administration shifts stance on housing subsidies The mayor’s office will allow double-dipping in an effort to achieve deeper affordability.

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August 5, 2015 by westsideneighborhoodalliance

In a change from last year, the de Blasio administration will let some residential developers double or even triple-dip into subsidy pools by using the same group of affordable apartments to qualify for a variety of programs—a practice it initially pledged to eliminate.

The pivot came to light as details of two housing programs were released in recent weeks. First, in late June the state legislature took a cue from the mayor and passed preliminary reforms to a property tax exemption called 421-a, requiring developers to set aside 25% to 30% of apartments in new buildings as affordable housing.

Then last Friday, the administration discussed the specifics of a new proposal called mandatory inclusionary zoning. The policy, which must be approved by the City Council, would set strict new affordability rules for any property that is rezoned, whether through a neighborhood-wide initiative or an individual property owner’s request. In those situations, developers must also set aside up to 30% of all new condo or rental buildings as affordable.

The administration had initially envisioned developers meeting the requirements for these two programs separately, drawing a hard line against “double dipping” into multiple subsidy pools, which it believed limited the creation of low-cost units. In other words, affordable apartments built to satisfy inclusionary zoning requirements couldn’t also be used to meet 421-a benchmarks.

“If you want the tax exemption, you will have to do more,” Deputy Mayor for Housing and Economic Development Alicia Glen told Crain’s in September, when the programs were still in their conceptual phases.

But the policies unveiled since then show a different approach.

In some cases, developers will be able to use the same group of affordable apartments to meet the requirements for four subsidy programs: the mandatory inclusionary program, which comes with the indirect subsidy of more density; the 421-a program, which comes with a tax break; tax-exempt bond financing, which offers cheap interest rates; and low-income housing tax credits, which are sold by developers to generate equity for a project (and must be applied for on a case-by-case basis).

However, having mandatory inclusionary zoning as part of any project will incentivize developers to improve affordability, and will make apartments permanently affordable, according to the administration and affordable housing advocacy groups.

That is only one of several scenarios, as the relationship between the many programs that generate and govern affordable housing is complicated. How the two programs interact with each other, provided they both end up as law, remains to be seen.

In Manhattan below 96th Street, for example, developers will likely not be able to double-dip. New buildings there are almost exclusively pricey condos, which were booted from the 421-a program after the June reforms in Albany (though if an individual property gets rezoned, it will still have to build affordable housing).

In some lower-income neighborhoods such as Brooklyn’s East New York, which the city has slated for a rezoning, developers wouldn’t be able to double-dip either. There, the two programs do not mesh and builders seeking 421-a benefits while meeting mandatory inclusionary zoning requirements would have to meet the mandates separately, providing affordability on up to 60% of units. The thinking is that new buildings in these neighborhoods are already primarily affordable projects that receive city subsidy, which can help developers meet both affordable requirements and then some.

Both policies have yet to be fully approved. The 421-a deal in Albany is contingent on two trade associations, the Real Estate Board of New York and the building trades, reaching an agreement on using union labor on 421-a developments. The mandatory inclusionary zoning proposal must traverse the public review process to become law.

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